Arrow Energy Pty Ltd., Brisbane, a 50-50 joint venture of Royal Dutch Shell PLC and PetroChina, has sanctioned commencement of Phase One of its $10 billion (Aus.) Surat gas project in southern Queensland.
The decision follows the announcement from Shell and PetroChina of a final investment decision (FID) for the first stage in the project that involves large-scale development of coal seam gas fields in the Surat/Bowen basin region.
The project is underpinned by a significant infrastructure collaboration and gas sales agreement together with a suite of supporting agreements put in place by Arrow and the Shell-operated Queensland Gas Co. (QGC) joint venture which owns one of the two-train LNG plants on Curtis Island near Gladstone, said Cecile Wake, Arrow chief executive officer.
“The agreement enables the use of capacity in QGC’s existing gas and water processing, treatment and transportation infrastructure, reducing the impacts on landholders, communities and the environment,” she said. “This ensures that more gas can be economically developed.”
Construction will begin this year with the drilling of more than 600 Phase One CGS wells. First gas is scheduled for delivery in 2021.
Over the full life of the project Arrow expects to develop about 5 tcf of gas from a total of 2,500 new wells.
Wake said that Arrow recognizes the current uncertainty caused by the COVID-19 pandemic along with the oil-price volatility and the company intends to make sure that the development retains sufficient flexibility to manage the evolving challenges.
The project sanction comes more than 13 months after the Queensland Government gave its approval at the end of February 2019.
Arrow operates five gas fields in the Surat and Bowen basins and produces 140 MMcfd of coal seam gas, the equivalent of around 40% of Queensland’s total domestic gas demand. It has been supplying coal seam gas since 2004.
In December 2017 Arrow reported a 27-year gas sales agreement to underpin the Surat gas project and supply gas to QGC.
The QGC joint venture comprises Shell 73.75%, CNOOC 25%, and Tokyo Gas 1.25%.
